SCIENCE-SUPPLEMENT, 



On the freedom of contract. 



FRIDAY, MARCH 5, 1886. 



REGULATION OF CONTRACTS. 

 The present age is fertile in economical problems, 

 due, in the main, to the great improvements in 

 production and distribution, and to the consequent 

 changes in the organization of business enterprise. 

 Among the questions that have thus arisen, and 

 are now demanding solution, one of the most im- 

 portant is that of the regulation of contracts by 

 state authority. It is held by some that the mak- 

 ing of contracts should be free from legal control, 

 and that the state should confine itself to enfor- 

 cing the due performance of them after they are 

 made. Others maintain that in the present con- 

 dition of industry, with immense masses of capital 

 concentrated in a single hand, or in a single board 

 of control, the interference of the state is some- 

 times needed for the protection of the weaker 

 party to the contract, or of the general public. 

 We have witnessed in recent years an example of 

 state interference with contracts on a great scale 

 in the Irish land law. This measure not only 

 released the tenants from some portion of their 

 accumulated debts, after the manner of a bank- 

 ruptcy law, but it also provided certain tribunals to 

 fix rents for the future. No greater interference 

 with freedom of contract has occurred in modern 

 times, and the example thus set may have im- 

 portant results in the future. We Americans 

 have not as yet any land question of this sort to 

 deal with ; but cases are constantly arising in 

 which the question of regulating contracts ap- 

 pears, and the consideration of it, therefore, can- 

 not begin too early. We bespeak our readers' 

 attention to the accompanying essays and to the 

 important subject of which they treat. 



HOW FAR HAVE MODERN IMPROVEMENTS 

 IN PRODUCTION AND TRANSPORTATION 

 CHANGED THE PRINCIPLE THAT MEN 

 SHOULD BE LEFT FREE TO MAKE 

 THEIR OWN BARGAINS? 



I. 



There has been a time in the history of almost 

 every civilized race when a man had a right to 

 bargain himself into slavery, if he chose, and 



this right was repeatedly exercised. But such 

 bargains were so clearly against public policy that 

 they were done away with long before slavery as 

 an institution was abolished . 



Where two parties to a transaction do not meet 

 on equal terms, free contract may be the surest 

 means of destroying freedom. Freedom, as far as 

 it exists, is the right to do as one pleases with him- 

 self or certain objects : free contract is the right 

 to limit that right. There are many instances in 

 which more free contract now, means less freedom 

 forever after. Self-enslavement was an extreme 

 case, and belongs to past history ; but there are 

 many others which involve the same principles in 

 practical shape to-day. 



For instance : common carriers try to make 

 special contracts which shall relieve them from 

 common-law responsibility, and put the shipper 

 at a disadvantage in various ways. The courts 

 refuse to enforce such contracts. The law not 

 only assumes that the parties to the contract meant 

 a great many things which they never thought of : 

 it sometimes insists that they did not mean certain 

 things which they actually said and wrote. The 

 courts are guided by considerations of public policy 

 in interpreting transactions, and enforcing con- 

 tracts. A right of every man to make his own 

 bargains, apart from and above such considera- 

 tions, never has existed, and in a highly organized 

 society it is hardly possible to conceive how it ever 

 could exist. 



The practical question is, Where shall we draw 

 the line ? And the point with which we are imme- 

 diately concerned is this, Have there been any 

 industrial changes which make it seem desirable 

 to draw the line differently to-day from what we 

 should have done half a century ago? 



To this question it is safe to answer, Yes, The 

 growth of large permanent investments under 

 concentrated management has developed a whole 

 system of new conditions affecting liability, dis- 

 crimination, and pooling. The old laws applied to 

 the new facts produce in many cases an effect 

 quite contrary to that which was designed : hence 

 the demand for new laws, and for new interpreta- 

 tions of existing laws. 



The growth of large investments of this kind 

 dates from about 1815. Three causes combined to 



